Callon Petroleum Sets 2006 Budget at $125 Million

Callon Petroleum Company (NYSE: CPE) has approved a 2006 capital expenditure
budget of $125 million, an increase of approximately 40% from the 2005
capital expenditure budget of $90 million. The company anticipates
that cash flow generated during 2006 and availability under its senior
secured credit facility, if necessary, will fully fund this budget.

The 2006 budget includes a total of 21 exploratory wells. Planned
drilling includes wells onshore south Louisiana, Louisiana and Texas
state waters, and Federal waters, both on the shelf and in the
deepwater region. At this time, six wells are either currently being
drilled or are planned to commence drilling within the next month.

High Island Block 165 - The #1 well is currently drilling below
16,000 feet toward a planned total depth of 17,000 feet. Callon owns a
23.3% working interest.

Mississippi Canyon 860 (Bob North Prospect) - The #2 well is
currently drilling below 9,000 feet, with a planned total depth of
more than 28,000 feet. This well is located in 5,500 feet of water.
The objective formations are between 20,000 and 28,000 feet. Callon
has a 3.3% working interest.

Brazos Block 405 #1 (Pelican Prospect) -- The exploratory well is
scheduled to spud in January and will be drilled to a total depth of
10,600 feet. Callon owns a 50% working interest.

Louisiana State Lease 18520 #1 (Prairie Beach Prospect) -- The
exploratory well is scheduled to spud before the end of this month and
Callon will operate. The well is planned to a total depth of 9,750
feet. Callon owns a 75% working interest.

East Cameron 268 (Blondie Prospect) - The #1 well should spud next
week, and will be drilled to a proposed total depth of 11,000 feet.
Callon operates and owns 50% working interest.

Mustang Island Block 771 (Wesson Prospect) - The exploratory well
is scheduled to spud next month and will be drilled to total depth of
18,000 feet. Callon owns a 20% working interest.

Callon Petroleum Company has been engaged in the exploration,
development, acquisition and production of oil and gas in the Gulf
Coast region since 1950. Callon's properties and operations are
geographically concentrated in the offshore waters of the Gulf of
Mexico.